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Emergency in the Heights: Charter school district seen as a risky, and only, option

Peprally.JPG

Muskegon Heights celebrated the promise of a new beginning for its school district with a pep rally last August that included the Muskegon Heights High School marching band. Emergency Manager Donald Weatherspoon said reopening the district as the nation's first charter school district was his only option to keep schools open in the city.
(MLive file photo)

A year ago, the future of Muskegon Heights Public Schools was in question as the district was drowning in debt. This is part of a series examining what went wrong and the groundbreaking plan to resurrect an educational system

MUSKEGON HEIGHTS, MI – When Donald Weatherspoon agreed to try fixing Muskegon Heights Public Schools, he stepped into an emergency well under way.

Aside from the monumental budget deficit that prompted the emergency manager’s arrival, student achievement scores were alarmingly low and buildings were unsafe and unfit for staff and students. Vendors were owed more than $4 million and many, including the state of Michigan, were demanding payment.

Revenue had slowed to a trickle, and with each passing day, the district was spending $18,000 it didn’t have.

When Weatherspoon arrived in late April, appointed by Gov. Rick Snyder to take control from the locally elected school board, there were just over four months until the start of the 2012-13 school year. Weatherspoon had to decide whether to shut down the district or figure out a way to reopen the schools.

In a sense, he did both.

He came up with the groundbreaking plan that ended Muskegon Heights Public Schools’ role of educating students and turned the district’s schools into privately-run charter schools. Doing so allowed the district to start over, tapping into a different pot of state aid reserved for charters while continuing to collect property taxes to pay off the school district’s debt.

“When I learned there would be zero dollars in the district for a long time, and the deficit was growing, I decided I had to shut the district down,” Weatherspoon said. “I had to stop the bleeding.”

If he kept the district as it was, staff would have had to take a 35 percent pay cut to balance the budget, and that would not have touched the $8.5 million deficit the state was insisting be eliminated, Weatherspoon said.

There wasn’t time to pursue bankruptcy to address the district’s debts. And it was unlikely voters in a neighboring district would vote to annex the district because that meant they would have to take on the Heights debts’ too.

Besides, Weatherspoon said he felt strongly that Muskegon Heights needed to retain the school system that unifies the financially depressed city and gives it a sense of community.

A baffling system

After a career spent mostly in Michigan state government, Weatherspoon had developed a large network of contacts in Lansing. He called on those contacts to negotiate more than $11 million in loans to pay the district’s obligations to vendors, including health insurance providers, utility companies and the district’s food service company.

A watchdog group questioned the legality of Weatherspoon’s plan to have Muskegon Heights Public Schools, which no longer had any enrolled students, to collect 18 mills of nonhomestead tax normally used for school operations to pay off its debts. Lawmakers were lobbied to pass a special law to allow for it.

Meanwhile, Weatherspoon needed to reestablish Muskegon Heights residents’ confidence in the school district. He held straight-talk community forums presenting the realities of the problems while trying to instill confidence in his plan.

“My first community meeting, people didn’t realize how bad it was,” he said. “Then it started seeping in.”

Inside the schools, he was unraveling a baffling management system. There was no formal inventory of the district’s equipment, right down to where lines were going for Internet service. And yet there were payroll records dating to 1910 that he feared posed a fire threat.

He found evidence that equipment, including computers, had been stolen. Employees would take things home and never bring them back, he said.

“It was just practice,” he said.

He discovered scores of people – volunteers, former employees, former athletes, church groups -- held keys to school buildings. Locks had to be changed.

Stored in closed buildings Weatherspoon found boxes of new but outdated textbooks, new leaf blowers, a new snow blower, defibrillators, paint, lots of cleaning supplies and even a new parking lot line-painting machine.

“I don’t know how many thousands of dollars were invested in this, but time had moved on and they had moved on to other things,” Weatherspoon said.

And yet the computer on his desk was so old it used 3 ½-inch floppy disks and he was told it had been common practice to take two school buses when athletes competed out of town – just in case one of them broke down.

‘No plan B’

Weatherspoon also was focusing on putting together an educational system that would improve lagging student achievement. It was the first time in the nation’s history that a school district was being converted to a charter district, and so he needed to develop the terms and conditions a charter school operator would be required to follow.

Along with help from the Michigan Department of Education and Muskegon Area Intermediate School District, he turned to a core group of employees who had worked for the school district, ranging from the administrative secretary to the athletic director to the elementary school principals.

“They were good sounding boards … We had to develop trust fast,” he said.

Three companies responded to Weatherspoon’s request for proposals from charter school management firms, though one later dropped out of consideration. Asked what he would have done if no company was interested in reinventing Muskegon Heights schools, Weatherspoon said he didn’t know. “There was no plan B,” he said.

In early July, Weatherspoon chose Mosaica Education Inc. to run the schools, primarily because of its experience in urban schools, he said. He also appointed a three-member charter board to oversee the district’s operations and negotiated a lengthy contract document that details the reports Mosaica is required to make and the services it is required to offer.

At that point, there were just two months to prepare for a new school year, including hiring all staff.

Race to the start

Mosaica’s decision to open the Muskegon Heights Charter School Academy System had its risks, said Gene Eidelman, president of Mosaica. Officials had no idea how many students would enroll, and therefore no idea what amount of state funding they could rely on, he said. With no state aid payment until October, Mosaica took out a $2.5 million loan to pay for such operations as payroll, professional development, marketing and supplies.

The company also was obligated to repair deteriorating school buildings – part of the contract requirements since Muskegon Heights Public Schools had no money to get the job done. And so Mosaica paid $700,000 to take care of years of neglect of buildings that the charter company doesn’t even own.

State fire inspections uncovered 170 safety violations. Before the schools could reopen as charter schools, code violations had to be addressed. Among the more expensive items that needed to be fixed before Mosaica could get occupancy permits were emergency lighting, electrical systems, plumbing and doors and related hardware.

Mosaica also needed to hire staff members quickly, including more than 100 teachers who would undergo 15 days of professional development. Mosaica suffered a major setback when before the first day of school, 30 percent of newly-hired teachers had left . More left during the year, and of teachers who left 28 percent went because they got jobs in traditional public school districts -- which have an attractive retirement system and oftentimes better pay than Mosaica’s $34,000 starting salary. Twenty-five percent left because of student behavior, according to Mosaica statistics.

“There was a point we were wondering if we were going to have enough teachers,” said Alena Zachery-Ross, who Mosaica hired to head the Muskegon Heights charter system.

Some teachers were put in classrooms without being highly qualified under state requirements, often because they weren’t from Michigan and hadn’t time to get the proper certification, Mosaica officials said. As a result, the state of Michigan fined the company $97,000.

With a year under its belt, Mosaica has tightened security with surveillance cameras and locked front doors, stabilized its teaching force and focused on student behavior with firm rules, even canceling Homecoming when student disputes arose over who would be king and queen.

“A tremendous amount has been accomplished, and it’s just a foundation,” Eidelman said. “But it’s been a sprint.”